Demand function for inputs l and k.

Question

Suppose the long-run production function for a competitive firm is f(x1,x2)= min {3x1,2x2}. The cost per unit of the first input is w1 and the cost of the second input is w2. A: Find the cheapest input bundle, i.e. amount of labor and capital, that yields the given output level of y. B: Write down the formula and draw the graph of the firm’s total cost function as a function of y, using the conditional input demand functions. What is the relationship between the returns to production scale and the behavior of the total costs? C: Write down the formulas and draw the graphs of the average cost and marginal cost functions, as functions of y.

Answer 1

Question

Chapter 10, Problem 10.6P

a)

To determine

To find:

Demand function for inputs l and k.

b)

To determine

To know:

Production function for q.

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